What a customer loyalty program is, and how to run one
A customer loyalty program rewards customers for coming back, so each visit gives them a reason to make the next one.
The reward can be points, credit, a discount or a free service. What makes it a program rather than a one-off discount is that it repeats: the customer earns, sees what they have, spends it and comes back to earn more. Velarya runs this for clinics, spas and salons inside the app clients keep on their phone. This guide covers how a program works, the types, how to choose one and how Velarya does it.
How does a loyalty program work?
Every loyalty program, whatever its type, runs the same four-step loop.
- The customer earns. Spending, visiting, referring a friend or paying a fee earns points, stamps or perks.
- The customer sees it. A balance they can check is worth more than one they have to ask about.
- The customer spends it. The reward becomes a discount, credit or a free service.
- The business learns something. Each earn and redemption shows who came back and what they bought.
The type of program is a choice about step one: what earns.
Is a rewards program the same as a loyalty program?
Yes. They are the same idea under two names, and a customer rewards program is what customers usually call it. Businesses tend to say rewards when the program pays out points, credit or free items, and loyalty for the wider goal of repeat business. For the customer it makes no difference, so use the name your clients already use.
Types of loyalty programs
Five types cover almost every program, and many businesses combine two or three.
| Type | How customers earn | What to watch | In Velarya |
|---|---|---|---|
| Points based | Points on each dollar spent, spent later as a reward | Rewards so far away that they never feel reachable | Points on what clients spend on services, turned into wallet credit at one fixed rate |
| Tiered | Customers move up levels, such as silver and gold, by spending or visiting more, and each level has better perks | Levels that feel out of reach, and more rules to track | Paid membership plans give members their own prices and perks, plus a points rate you can set higher than everyone else’s |
| Paid | Customers pay a recurring fee for perks such as discounts and included services | Perks that members forget to use, which lead to cancellations | Membership plans you build, billed monthly, quarterly or annually, with wallet credit, included treatments and member pricing |
| Referral | Customers earn a reward for bringing in a friend | Rewards paid for friends who never visit | Both people are rewarded, with points or a free service, once the friend meets your rule |
| Punch card | A stamp or punch for each visit, with a reward after a set number | Lost cards, copied stamps and nothing learned about the customer | The app replaces the card: a QR check-in records the visit and earns points |
Velarya runs points, paid memberships and referral rewards, with QR check-in points for visits. The software is on the loyalty program software page, and the app that replaces the punch card is on the loyalty app page.
How to choose a small business loyalty program
Match the type to how often clients visit and how much they spend each time.
- Frequent, smaller visits (a barber, a nail salon, a massage studio): points on spend and check-ins make every visit count.
- Less frequent, bigger visits (a med spa, a dental office, a laser clinic): points on spend plus a referral reward, because word of mouth matters more than visit counts.
- Regulars with a routine: a paid membership, so the routine becomes a monthly commitment.
Start with one or two types you can explain in a sentence at the front desk, then add another once the first is running. Velarya’s referral rewards and memberships have their own pages: referral program software and membership software.
What changes in a healthcare loyalty program
A loyalty program in healthcare holds patient information: who the patient is, what they bought and when they came in. Ask the vendor for a Business Associate Agreement. Velarya signs one with every practice, on every plan, and the detail is on the security page.
Rewards for patients can also raise rules of their own. If your practice bills Medicare, Medicaid or another federal health program, talk to your counsel about patient incentives before you launch a referral reward.
Velarya runs beside the clinical system you already use. It takes the loyalty program and the booking, and your EMR or practice software keeps the chart.
How Velarya runs a customer loyalty program
Velarya runs the whole program in one app, so a client earns, checks their balance and spends in the same place. Each piece is a setting you switch on.
- Points on spend. Clients earn points on what they spend on services at the rate you set per dollar, and members earn at their plan’s rate.
- QR check-ins. Staff scan the code in the client’s app to award points for showing up, with limits you set.
- Referral rewards. A client shares a code, a friend joins, and both are rewarded when the friend meets your rule.
- Birthday gifts. A gift on the client’s birthday, as a discount, a free service or points.
- Promo codes. Percent or fixed discounts for the dates, services and locations you choose.
- Paid memberships. Plans with their own prices and perks, billed on a schedule.
- Wallet credit. Clients turn points into wallet credit in the app and spend it at checkout.
Points from spending, check-ins, referrals and birthdays land in one balance, with a ledger entry for every earn and redemption. You do not have to move your scheduling to use it: Velarya booking can be switched off, and the program keeps running beside the scheduler you use today.
Every plan comes with an app, either the Velarya app in your colors or your own branded app under your name on the Branded and Connected plans. Clients see their points, wallet credit and check-in code in it, and the pricing page shows what each plan includes.
Mistakes that sink a loyalty program
- The reward is too far away. Customers keep going for a goal they can see themselves reaching, so set rewards within a few visits.
- The program is hidden. A balance people must ask about is a balance they forget.
- Too many rules. Keep the rules to what the front desk can explain in one sentence.
- Nobody asks. Mention the program at checkout, when the customer is happiest.
- The reward costs more than the visit brings in. Work out what a reward costs you before you promise it.
To see a program built around your own menu, book a demo.
Frequently asked questions
What is a customer loyalty program?
A customer loyalty program is a system that rewards customers for repeat business, usually with points, credit, discounts or perks. The customer earns each time they buy or visit, sees what they have earned and spends it later, which gives them a reason to come back to you instead of going elsewhere.
What are the main types of loyalty programs?
The five main types are points based, tiered, paid, referral and punch card programs. Points based programs reward spending, tiered programs reward reaching a level, paid programs sell perks for a fee, referral programs reward bringing a friend, and punch cards reward repeat visits. Many businesses combine two or three.
How does a points based loyalty program work?
A points based loyalty program gives customers points for what they spend and lets them spend the points on rewards. In Velarya, clients earn points at a rate you set per dollar on services, members can earn at a higher rate, and clients turn their points into wallet credit in the app.
What is a tiered loyalty program?
A tiered loyalty program groups customers into levels, such as silver and gold, with better perks at each level. Velarya’s paid membership plans give members their own prices and perks, plus a points rate you can set higher, so a business can offer levels that customers choose to join.
What is a customer rewards program?
It is another name for a customer loyalty program: customers earn points, credit or perks for buying or visiting. Businesses tend to say rewards when the payout is points or credit, and the two work the same way.
What is a good small business loyalty program?
A good program is one a client can understand in a sentence and a front desk can explain at checkout. Points on spend plus a referral reward is a simple start, and a paid membership suits regulars. Velarya runs all three from one app and one dashboard, and you switch on only the parts you want.
Is a healthcare loyalty program different from a retail one?
It differs mainly in the data and the rules around it. A healthcare program holds patient information, so the vendor should sign a Business Associate Agreement, and patient incentives can raise legal questions if you bill a federal health program. Velarya signs a Business Associate Agreement with every practice, on every plan.
Can I run a loyalty program without changing my scheduler?
You can keep your scheduler by switching Velarya booking off. Clients still earn points on what they buy in the app and when staff scan their check-in code, and they redeem their credit the same way.